Be Wary of Internet Capital Group

The subtlety of promotional ethics often gets trampled on by broad rules meant to target miscreants. Take Internet Capital Group (ICGE - commentary - Cramer's Take). I have been watching this stock trade 23 million shares a day, a huge increase in volume, as the company keeps exchanging stock for debt in an endless battle to clean up the residue of loans left over from the heyday.

In a previous decade, ICG was a promoter's dream, and Henry Blodget, late of the industry, played ICG to the hilt. The breakup value, the hidden gems, the outrageous possibilities, they all fitted in perfectly as ICG proceeded to finance the heck out of the market.

These days, of course, ICG seems like a hulking carcass, a kind of empty hot-rolled steel plant on the banks of some godforsaken tributary of the Delaware waiting to be refurbished as something, anything, that could make it worthwhile.

And you know what? It would be simple to get behind it once again. ICG is an agglomeration of stakes in a handful of public and a fistful of private companies. The public pickings are slim; even if they were to double and double again, it wouldn't mean much to this $250 million market cap company.

Ah, but in the wrong hands, in the hands of someone who wants to promote, who has a gift for promoting, who can and will use whatever vehicle available to promote, ICG could become a nightmarish frenzy of activity, easily doubling in the blink of an eye as unsuspecting individuals seized on the lottery-ticket nature of a 50-cent security.

You can almost hear it spin out of control: "OK, let's take LinkShare, which ICG owns 40% of. In the heyday, LinkShare was going to come public for a billion dollars and at the time, it was losing money hand over fist. Now it's profitable and it has to be worth something; maybe the 40% share of LinkShare is worth the whole price of the company. And when you consider that ValueClick (VCLK - commentary - Cramer's Take) owns its competitor, BeFree, who's to say that ValueClick won't make a preemptive bid right to ICG to own the targeted Web affinity advertising market!"

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Please note that due to factors including low market capitalization and/or insufficient public float, we consider Internet Capital Group to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

At the time of publication, Cramer was long ValueClick.

James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to [e-mail]. Listen to Cramer's RealMoney Radio show on your computer; just click here. Click here to buy Cramer's latest book, "You Got Screwed!" Click here to order Cramer's autobiography, "Confessions of a Street Addict."